THE HOUSING SCENE

Network Helps Second-Home Owners Swap

WASHINGTON — Norman and Carlisle Scott own a three-bedroom, two-bath vacation house in Myrtle Beach, S.C. But they are not limited to a single location for their holidays.

In fact, the self-professed "Italy freaks" spent three weeks on the island of Elba last year and are going back for four weeks this year.

Bob and Judy Cowan have a three-bedroom townhouse in Vail, Colo. But the retired couple from Rogers, Ark., hardly use the place anymore. Two years ago, they spent four weeks in the Turks and Caicos Islands in the British West Indies. And last year, they vacationed on Big Pine Key in Florida--all for virtually nothing.

How do they do it? How can they sink big money into second homes and still have the wherewithal to furlough elsewhere?

They're members of VacationLink, a fast-growing 3-year-old exchange service that allows second-home owners to use their vacation homes as collateral to travel the world.

The service, says its founder, E. Wade Shealy, is "a nice marriage of what people really want--a second home with a little diversity."

Exchanging is a proven concept in the time-share business. Indeed, the ability to trade the one or two weeks you own in your favorite retreat for a week or two in another resort hot spot isone of the reasons time sharing is so popular.

But flexibility is not the strong suit of full second-home ownership. Indeed, if there is one drawback to owning a second home--forgetting for a moment the cost and the upkeep--it's that you're pretty much limited to one location for all your respites.

Sure, most people would like to be "stuck" in Hawaii or Sun Valley, and there's nothing in the rules that says you can't vacation anywhere you'd like. But when you've already paid all that money for a place in some distant spot, it's awfully hard for most folks to dig back into their wallets to take the entire family somewhere else for an extended stay.

Enter Shealy, a resort real estate specialist who founded VacationLink in 1996 when he "saw a big void in the marketplace" and decided to fill it.

The commitment to one location that is created by investing in a vacation home "has been a dilemma for second-home buyers for years," he says. "They don't want to share a condo with 50 other people. They want to use their vacation homes any time they want. And they are willing to give up flexibility to get what they want."

Now, though, with VacationLink, an investment in a second home can be a bridge to unlimited vacation homes.

Based in Atlanta, VacationLink works just like time-share exchange services. Owners decide which weeks they're not going to use their homes, and they deposit those intervals with the company.

Then, from a catalog that now lists more than 1,000 properties from Barbados to New Zealand, from Aspen to Hong Kong and from San Francisco to Fiji, they choose a place of similar value to theirs and away they go.

Of course, they could swap homes directly with other owners. An estimated 50,000 families throughout the world trade mostly primary residences with other owners every year.

But finding exact matches--not just the right place but also the exact same time period--is a labor-intensive, time-consuming task.

VacationLink, on the other hand, eliminates most of the work. "That's the beauty of it," says David Batten, a Raleigh, N.C., attorney who exchanged a week at his place on the Outer Banks for a week in a five-bedroom townhouse next to the ski lift in the heart of Aspen, Colo. "You don't have to have a true item-for-item swap."

The exchange network is a remarkably simple, efficient and self-regulating mechanism. But it's not cheap. Annual membership fees range from $195 to $495, depending on which of five value levels your property falls into: under $200,000, $200,000 to $500,000, $500,000 to $1 million, $1 million to $3 million, and $3 million and up.

Members agree to classify their properties accurately. VacationLink reserves the right to reclassify a property if the member under- or overvalues it. The service also maintains the right to terminate members who don't represent the quality of their property fairly.

But Shealy, who spent 11 years on Hilton Head Island, S.C., hasn't had to do much of that yet. "Everybody's been pretty honest," he says. "They know that sooner or later, we're going to find out if they fudged."

The Scotts certainly haven't had any problems with the places they've stayed at, and neither have the Cowans.

"In every case," says Norman Scott, "the homes were as nice or nicer than ours." Adds Judy Cowan, "Our home in Vail was nothing like the one in the [Turks and Caicos] Islands; our place is nice, but theirs was wonderful."

When you join the network, you are asked to list the dates your property is available for exchange. Then, for every week that your place is used by another member, you receive a credit to use another member's place for a week. Members can use up to two weeks in advance, but after that, they have to wait until another member uses their place.